Corporate Reputation Risk: Is It Adversely Affected When CEO’s Publicly Express Political Opinions…?

CEO’s expressing a political opinion publicly, particularly one which the electorate is deeply polarized, becomes a self-assessing and reputation spreading act, which consumers, stakeholders, and markets may not expect, thus, a new variant to company reputation risk!

Make no mistake company reputation is a very valuable intangible asset. When effectively and intelligently managed a company’s reputation, that is, the expectations it fulfills for consumers, stakeholders, and markets, can be a substantial source of contributory value manifested as competitive advantage, profitability, market space, and sustainability.

Interestingly, there have been numerous, prominently reported, pre-post-election statements, made by company CEO’s and senior management which may affect (their) reputation. I presume these statements reflect deeply rooted personal and/or business frustrations which largely are focused on the now presumably inevitable realities of the Affordable Care Act, or Obamacare, as most refer to it. For the company’s noted below, I wonder if their reputation may prove more resilient than I would have thought?

One example is Papa John’s (pizza) CEO John Schnatter, who stated he plans on passing the costs of health care reform (Obamacare) to his business and onto his workers. Schnatter also reportedly said he will likely reduce his employee’s hours as a result of President Obama’s reelection and the implementation of Obamacare. That statement was soon followed by another in which he told shareholders that the cost of a Papa John’s pizza will increase between 11 to 14 cents, again, due to the implementation of Obamacare.

Schnatter subsequently admitted, “I got in a bunch of trouble saying this, but, that’s what you do, is you pass on costs, unfortunately, I don’t think people know what they’re going to pay for this.” So, perhaps, in an attempt to at least partially walk back a bit from these statements, which through my lens, constitutes a classic ‘reputation risk 101’ no-no, Schnatter stated he is ‘neither in support of, nor against the Affordable Care Act’. He even admitted that “the good news is 100 percent of the population is going to have health insurance.”

But Schnatter is not the only senior executive (CEO) in the food service sector to state that workers hours may be reduced due to a mandate in Obamacare which states that employees who work more than 30 hours per week will be covered under their employer’s health insurance plan.

Other CEO’s also went on ‘front-street’, expressing similar (personal) pre/post-election frustrations. Each must surely have known their statements would prompt some push-back from consumers, markets, and stakeholders, because, if for no other reason, a substantial percentage of the former are Obama supporters. I just don’t believe it will be a matter of ‘rocket science’ to infer the CEO’s remarks will variously and adversely affect their company’s reputation.

Other food service sector senior executives spoke publicly and in an equally forthright manner about the added costs they believed Obamacare would bring, particularly Zane Tankel, an Applebee’s franchisor who stated the restaurants he oversees would not hire new workers because of the law.

Scott Farmer, CEO of Cintas, a Cincinnati-based uniform company sent an email to his 30,000 ‘partners’ or workers prior to the election asking them to make their voice heard in the upcoming Election, i.e., the

Affordable Care Act and other policies of President Obama may cost them their health insurance and ultimately their jobs…

uncertainty felt by many customers about their ability to run and grow their businesses, prevents them from adding jobs which hurts our (Cintas’) ability to grow and add jobs…

Cintas’ spokesperson, Heather Maley stated (Mr. Farmer’s) communication was not an attempt to suggest how employees should vote. Rather it was sent to help them make an informed decision, because he is frequently asked by Cintas’ partners all over the country what is important to Cintas and how do federal regulations and policies impact our company?

Another example was ASG Software Solutions’ CEO Arthur Allen, who sent an email to workers insinuating their jobs may be at stake with another Obama term. Too, Westgate Resorts CEO David Siegel sent an email to his workers describing how Obama’s policies may “threaten” their jobs. And, not surprisingly, Koch Industries sent pro-Romney literature to 45,000 of its employees. Also, according to a report in The New Republic, Murray Energy’s head, Robert Murray, encouraged his employees to contribute to Romney’s campaign,

The reality is, there is nothing particularly new here. Most American labor unions have consistently and publicly been aligned with political parties, especially, Democratic party platforms’, for years. Today, however, in my view at least, consumers, stakeholders, and markets are more attentive and sensitive to a company’s reputation. Reputation is simply more fragile than it used to be for companies, let alone, brand loyalty!

I’m just not convinced public expressions such as this are necessarily something which a company’s board would be suppportive since it carries many of the known requisites for producing at least some consumer back lash, if not a very genuine reputation risk. In these instances, political neutrality, at least publicly, may be the better, and more ‘expected’ option.

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